I have this thought passing through my mind on how the average person can really climb the wealth ladder but it seems that a certain point, there really is no need to work anymore. So why doesn't wealth just keep passing down and why we see new families come and old families go?
Say someone is sitting on a portfolio of 10 million dollars (something very achievable for 2nd generation children). They invest this into various income streams such as fixed income, equities and high-risk private investments/real estate. Now say they are conservative investors and prefer most of their income be held in fixed income, but will change allocation depending on times (i.e. recessions make allocation more equities heavy). Doing the crunch 10 million will yield close to 500k gross very single year. The rates used are 3% - fixed income, 6% - equities return, and 10% on high-risk investments and allocations are 50/25/25 - fixed income. equities and high risk.
So my grasp of this is that there are wealthy businesses that make this much in profit, but here you have someone making this in their passive income. I mean even if the investor uses this as the main source of income, its almost as if the individual is 'running' a business and can invest the returns to generate even more. I guess at a point there is no need to work.
But the question remains. If it is this easy to generate wealth after a certain point, why do we not see a concentration of wealth remains for ages? I understand that back in the day, wars and assassinations would basically cut the lineage, but in the recent 100 years, it almost seems wealth is always going to be concentrated into a few hands. So how does wealth change hands?
Submitted September 02, 2018 at 10:59AM by bliss19 https://ift.tt/2PqulWD
